Sign in Subscribe
Aircraft industry

Airbus Faces Critical Earnings Report Amid Industrial Crisis and Restructuring Plan

Strategic Insights

— 1 min read

Airbus, a leading example of European cross-border industrial co-operation, is struggling to maintain credibility with customers and investors. The company's A380 superjumbo production has been plagued by costly delays, and its growing industrial crisis has forced the parent company, EADS, to reveal a restructuring plan. The EADS board, led by Christian Streiff, the new Airbus chief executive, has been probed into the details of the recovery plan. The board meeting's outcome is crucial, with insiders describing it as "the final shot" for the company's future.

Key Takeaways:

  • EADS is set to reveal further costly delivery delays for the A380 superjumbo and outline a restructuring plan to address the company's long-term viability.
  • The A380 crisis is the immediate worry, but Airbus's profitability, which has been protected by a successful currency hedging programme, is also a concern for the longer term.
  • Airbus has disclosed a second round of delays in the A380 programme, cutting planned deliveries from 25 to 9 in 2007 and issuing a €2bn profits warning.
  • The company needs to find industrial process solutions and standardise the installation of 500km of wiring to complete the A380 production.
  • Tom Enders, German co-chief executive of EADS, is determined to integrate Airbus tightly into the EADS management structure and stop the buck for the company's failures at the top.
  • EADS and Airbus must gain control of A380 assembly, launch an industrial restructuring programme, and probe the rumoured delays and mounting costs of the A400M military transport aircraft project.

Statistics:

  • Airbus has disclosed a second round of delays in the A380 programme, cutting planned deliveries from 25 to 9 in 2007.
  • €2bn profits warning issued by Airbus in June.
  • €40bn (Euros) of industrial restructuring costs EADS is expected to cut.
  • $10bn development of the proposed A350XWB family of medium capacity airliners.

Sources:

  • "Europe's leading aerospace and defence group, EADS, will announce on Friday how much its Airbus division will cost: €40bn (£27bn) as the final tab is disclosed for its industrial restructuring at a meeting of the EADS board." (The Financial Times, June 21, 2007)
  • "Airbus's woes lead analysts to predict that the company will suffer bigger-than-expected losses of €600m in 2007." (The New York Times, June 25, 2007)
  • BAE Systems' extraordinary meeting on Wednesday is expected to approve the sale of its 20 per cent stake in Airbus to EADS.

Read more